October 06, 2015

Why Are Class Actions So Critical? It’s Volkswagen, Duh!

Class action lawsuits are among the most important tools that harmed, cheated and violated individuals and small businesses have to hold large corporations and institutions accountable. But with the start of the new U.S. Supreme Court term, there has been commentary from all sides (see e.g. here, here, here) recognizing one very scary possibility: by the end of this term, SCOTUS could decimate class actions. Or I should say, finish the job they already started when they allowed corporations to ban class actions via contracts, and force people into private, corporate-run arbitration systems. Even when companies commit civil rights violations. Even when nursing homes neglect or abuse patients. Even when huge cartels steal from small businesses. Even when bank and credit card companies cheat customers. (See more examples here.)

But if you think huge corporations and their allies in Congress are sitting back and waiting for the Court to act, I’ve got a Volkswagen “clean diesel” car I’d like to sell you! (C’mon. It’s right here on my back lot. Just a tiny mark-up for those “low emission” extras.)

Perhaps even more under the radar than these big Supreme Court cases is a little bitty congressional bill called H.R. 1927, the “Orwellian-named” Fairness in Class Action Litigation Act of 2015. This bill, which has already been approved by the U.S. House Judiciary Committee and sent to the House for a vote, would make it virtually impossible for any class action to proceed. Yes, all the examples above would be covered. But you'd no longer need a contract to be shut out of court. As long as you were harmed, cheated, defrauded, abused or violated and tried to join with others to sue, your case would be thrown out of court almost immediately under this bill.

ALEC wants to make class actions impossible to bring, so hundreds of thousands, or perhaps millions of victims, can’t join together in a lawsuit against us [Volkswagen]– even though we stuck the exact same cheating software in every single one of their cars. Just look at the hurdles and burdens their bill would place on our (likely ex-) customers. They'll all have to hire their own attorney and go through the time and expense of proving their cases one by one by one (which we expect they'll never do.)

But if H.R. 1927 became law, states could just sit back and relax while Congress did the dirty work for them – courtesy of the bill’s prime sponsor, House Judiciary Committee Chairman Bob Goodlatte (VA-R). (His own Virginia constituents would be shut out of court by this legisation.) As we wrote last April,

While H.R. 1927 doesn’t come out and simply prohibit class action suits, it establishes criteria that is nearly impossible for plaintiffs' to meet.…

Slews of cases and victims would be disqualified from bringing a class suit. The requirement that every member of a class have the same type and extent [now “scope”] of injury would preclude numerous class actions over predatory lending practices, anti-trust violations, employment law violations, unfair bank overdraft policies, denial of insurance benefits, and more - much more than I can mention. Even victims of the BP oil spill would be covered by this bill.

Now add customers cheated by VW, who paid thousands of dollars in markups to get a "clean" diesel car. Even if VW can now “fix” their car, these customers will never own the car they thought they were buying. So not only are they out a lot of money, they were horribly deceived and many will want their money back. Wouldn’t you?

Class actions, which have now been filed in at least 32 states, are the only realistic way for angry customers to recover what they're owed. Some state AG’s are also stepping in as law enforcers, as they should. And while some state AG’s, like West Virginia’s, will try to recover compensation for their residents, most state AG’s lack authority to recover private damages for individuals (as opposed to civil fines which go to the state). And even if they have the authority, they usually lack the enormous resources needed to handle discovery in these cases, to hunt down documents and uncover what really happened. This detective work is something the private bar can often do best.

Some firms explained to the National Law Journal the reasoning behind several of these filings:

Many of the class actions are seeking reimbursement for the premium prices they paid, but others want much more than that. “Even if you give them a fix that is only to meet EPA regulations, they still didn’t get the fuel efficiency they wanted,” said Frank Pitre of Cotchett, Pitre & McCarthy in Burlingame, California. “Those folks might say: ‘I want my money back.’ ” …

One favorite venue is the Eastern District of Virginia, where Volkswagen’s U.S. headquarters is based in Herndon. Volkswagen Group of America Inc. has been named in nearly all the suits, and subsidiary Audi A.G., whose U.S. division is also based in Herndon, has been named in a few cases.

“We think that there’s certainly going to be witnesses and evidence centered in that district,” said Warren Burns, a partner at Burns Charest in Dallas. “It’s been my experience in cases of this size and complexity that invariably you’ll be drawn by the decision-makers, and those folks are in the headquarters.” …

But there’s also California. In addition to the California Air Resources Board, which assisted the EPA in uncovering the scandal, two electronics research laboratories in the San Francisco Bay Area were involved in recent testing of renewable fuels in Volkswagen’s diesel cars.

“We think there’s a gold mine of information here in Belmont about how bad these vehicles were performing and, what’s worse, continuing to tout these vehicles were performing very well and even better with renewable fuels,” Pitre said. …

“We have California defendants that we believe knew or should have known about the fact that the emissions were rigged,” said A. Barry Cappello, managing partner of Cappello & Noël in Santa Barbara.

In April, more than 50 national and state organizations sent a letter to Congress expressing strong opposition to H.R. 1927, including a broad array of prominent consumer, civil rights, immigration, labor, environmental, health, food and product safety, employment, housing, senior citizen, children’s, low-income and legal services organizations, among others. The groups said this bill “would effectively eviscerate consumer, employment and civil rights class actions.” The importance of class actions is clearer than ever. Time to let Congress know how you feel.

Comments

We need to be able to join class action law suits! This is absolutely outrageous! I hope people will become aware of this awful possibility you warn us about. It feels as though our rights as Anericans are eroding right before our eyes! If we aren't vigilant we could lose so much! Corporations will be laughing all the way to the bank!

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